Vehicles to get costlier

The prices of all kinds of small and medium sized vehicles such as car, microbus and SUV will go up as supplementary duties have been increased in the proposed budget, said vehicle importers.

They said 45 percent supplementary duty has been imposed on up to 1,500cc engine capacity cars. At the same time, the prices of medium capacity vehicles or SUVs (sports utility vehicle) will also hike due to additional supplementary duty.

Abdul Mannan Chowdhury Khoshru, president of Bangladesh Association of Reconditioned Vehicle Importers and Dealers Association (Barvida), said due to appreciation of the US dollar and Japanese Yen against taka, new and old private car prices are already up in the country.

Following the budget proposal placed in the parliament on Thursday, now the prices of the vehicles will go up further, he said.

7.2pc GDP growth targeted

The government has set 7.2 percent gross domestic product (GDP) growth target for fiscal 2012-13, up by 0.9 percentage point than the outgoing year.

In his budget speech presented before the parliament Thursday afternoon, the finance minister reasoned out the higher growth rate on the possible recovery of global financial turmoil and a solution in domestic energy crisis in the coming year.

The country’s GDP grew by 6.7 percent in 2010-11 and the provisional estimate was set at 6.3 percent for the outgoing fiscal year. It also targeted to increase GDP growth rate to 8 percent by 2014-15.

The government has set the higher grower rate as it expects the global economy will turn around by 2013 and a satisfactory growth in trade and agriculture sectors will continue.

Inflation target set at 7.5pc

The government has targeted to reign in inflation at 7.5 percent in the fiscal 2012-13, expecting that falling commodity prices on the world market, increased food grain production domestically and higher foreign exchange supply will help ease inflation.

Economists however said achieving the goal to bring down average inflation to 7.5 percent from over 10 percent at present would be tough in the face of increased government borrowing from banks to fulfil election promises, possibility of further hike in fuel and electricity prices.

Tk 1,91,738cr budget unveiled

The outlay in the next fiscal year’s budget has been increased by 19 percent over the revised one of the current fiscal to fix the expenditure at Tk 1,91,738 crore which is 18.1 percent of the GDP.

The increase in the development budget is the highest than the non-development outlay eyeing the ensuing national elections.

Development expenditure, up by 31 percent from the revised budget, has been fixed at Tk 60,137 crore, of which Tk 55,000 crore is for annual development programme (ADP).

Non-development expenditure, raised by about 10 percent, has been fixed at Tk 1,11,675 crore.

In the current FY, non-development expenditure was hiked by 24 percent of the revised budget of the previous fiscal year.

To meet the increased expenditure, more focus has been given on income tax, supplementary duty and non-bank borrowing than bank borrowing in the next fiscal year’s budget.

Expenditure on interest payment has been increased alarmingly. The highest 17.2 percent of the non-development budget will be spent on interest payment.

Allocation on interest payment in the next budget has been increased by about 18 percent or Tk 3,500 crore over the revised budget of current FY and Tk 23,302 crore has been kept for the purpose.

In the next budget, another big head of expenditure in the non-development budget is on subsidy though the finance minister’s budget speech or budget document do not have any clear picture about what amount has been given on subsidy.

A finance ministry official said the amount may be around Tk 35,000 crore.

In the current fiscal year, the finance minister in his budget speech gave a total picture of subsidy.

According to his budget speech in the current FY, original allocation for total subsidy including for agriculture, power and energy was Tk 20,477 crore which went up to Tk 30,154 crore in the revised budget.

In the current fiscal year, the government faced huge criticisms for bad shape of roads and highways. In the next budget, Tk 2,148 crore has been allocated for building and repairing roads. Tk 3,000 crore has been given to the public private partnership (PPP) fund.

Revenue earning has been increased by 21.57 percent to make it Tk 1,39,670 crore. Of the amount, NBR tax has been raised by 21.53 percent and non-tax revenue by 22.82 percent.

Proposal has been made to increase income tax by 25.79 percent, VAT 17.96 percent and supplementary duty 23.11 percent.

In the next fiscal year’s budget, the deficit has been estimated at Tk 52,068 crore or five percent of the GDP.

To meet the deficit, the new budget proposed increasing net foreign borrowing by 69 percent with a target of Tk 12,540 crore, although in the current FY the government failed to utilise half of the targeted foreign assistance.

But in the face of huge criticism over bank borrowing, the government has cut it by 21 percent from the current FY’s revised budget and set it at Tk 23,000 crore in the next budget.

However, in the current FY’s revised budget, bank borrowing has been upped by 54 percent from the original target and fixed it at Tk 29,115 crore.

In the same way, borrowing target from the non-bank including savings instrument has been increased by 95 percent over the revised budget and set at Tk 10,484 crore.

Nothing for people in budget: BNP

The main opposition BNP in an instance reaction to the proposed national budget said the government placed a ‘populist budget’ considering the next general election.

The party also termed the budget for fiscal 2012-13 as investment hostile and not a pro-people one, said MK Anwar, a member of the national standing committee, the highest policymaking body of the party.

He was addressing a press conference in the party chairperson’s Gulshan office Thursday evening.

The national budget is not highly ambitious but impossible to implement, as the funding remains uncertain, Anwar said.

Tax exemption for Tk 5,000 dividend

Dividend income of up to Tk 5,000 will get tax exemption in the next fiscal, a new incentive for share investors, thousands of whom suffered huge losses from the market downswings since January last year.

While placing the national budget for fiscal 2012-13 at the Parliament on Thursday, Finance Minister AMA Muhith proposed the tax exemption in line with efforts to strengthen the capital market along with maintaining its stability.

Presently, dividend income is added to the main income of an individual and the tax is calculated on the total amount. A 10 percent tax deducted at source is also set in the dividend income.

Muhith also offered 10 percent tax rebate facility for the companies that will float 20 percent shares of paid-up capital through initial public offering (IPO) to encourage new listing on the stockmarket.

He also proposed to reduce the income tax rate of merchant banks from existing 42.5 percent to 37.5 percent.